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Urban Jürgensen: the sharp eye of Mr Petersen

INTERVIEW

March 2018


Urban Jürgensen: the sharp eye of Mr Petersen

The former executive manager of Nokia, Danish-born Søren Jenry Petersen, lead the acquisition of the Swissmade Danish brand Urban Jürgensen with fellow Danish investors. Coming from another field, that of communications, he takes a sharp – even severe – view of the functioning and future of the watchmaking industry. Encounter.

Y

ou purchased Urban Jürgensen three years ago. You are Danish, like your brand, but you were originally in the telecommunications field. What are the principal points that you remember your first encounter with the watchmaking industry?

First of all, we bought a ‘sleeping beauty’, even though the brand has enjoyed 245 years of uninterrupted activity. When we purchased it, it was a relatively unknown brand, only familiar to collectors and connoisseurs. In 2015, we began by laying the foundations of what Urban Jürgensen could become, revising all the aspects of the company’s value chain, production and delivery processes. This is a delicate task when you are taking over such an old brand. There are so many obstacles that easily lead to a dead end in the longer run...

We then revised each aspect of the company’s branding, including the logo, website and tagline. All this in order to establish a platform on which the brand may grow. We did not purchase Urban Jürgensen as a ‘matter of the heart’; it is a business. That is why our relocation to the new workshop in 2017 was a crucial step.

Urban Jürgensen: the sharp eye of Mr Petersen
Photograph: Fabien Scotti | Arcade Europa Star

Was it harder than you imagined?

I didn’t have any illusions! I know that embarking upon a takeover of a small, artisanal, independent brand means working 60 hours a week. Now, after a stable year in 2015, we have since shown constant growth, in the range of 80-100% per year. And I mean effective sales, not consignments.

Where are you now in terms of production capacity?

Last autumn’s launch of the Alfred model was the result of several factors: our new workshop in Bienne; the level of quality that we offer for a more affordable price than before (14,300 euros); direct sales from the workshop of this one piece; and a name taken from the last member of the Jürgensen watchmaker family who died in 1912. The name reflects our heritage but it also represents progressiveness, since Alfred was the most forward-thinking member of the lineage. Because, of course, a name on its own is not enough!

We got the idea as we found a movement while moving the atelier from Jacques-Alfred Jürgensen’s time signed Alfred Jürgensen. It all went from there: even the typography that we use today for this watch is lifted straight from the letters engraved on this caliber. In the end, it is easier to base our products on something authentic rather than reusing an old name with a story contrived for marketing reasons. The industry is already saturated with that...

Since you come from another industry, what view do you take of how the Swiss watchmaking world works?

The greatest surprise that I had was the difficulty that I encountered with suppliers. Their ability to deliver components in time – with the expected quality and for the arranged price – is really very limited. I simply didn’t expect that, since I was raised to believe that if you want good quality, you ask the Germans; if you want excellent quality, you ask the Japanese; and if you want perfection, you ask the Swiss! But I found that the quality and process management really lacks a systematic approach.

But do you think you are treated differently as a little independent company?

Part of it possibly comes from being small and having ultra-high requirements – but I am almost completely convinced that that is not the problem. However, I believe that the big groups have purchased and integrated a big part of their supply chain in order to spare themselves the delivery problems that I am currently encountering. It all depends on that. When you cannot count on your suppliers, it’s not a good feeling...

Alfred Watch
Alfred Watch

Any other surprises?

The other big surprise was the watch industry’s train wreck of the demand/supply balancing, and the process of market destruction when faced with inconsistencies between the demands of end clients and the production. This lack of connection between brands and their clients is something I’m not used to. I worked for decades in telecommunications, an industry obsessed by the client: where the client comes from, and how and why he or she consumes our products. In the watch industry it was most likely a combination of the previous consolidation and M&A frenzy, combined with seemingly endless growth – many just took the eyes off the ball.

Where is the problem coming from, then?

Majority of the blame falls back on the brands that really did not do enough basic work to understand the true demand for their products and develop a demand/supply balancing process in their management systems. ‘Flying blind’ for more volumes into existing retail network and at the same time aggressively building out own flagship stores is something very difficult to do while building this visibility. True demand numbers are hard to come by.

In the end, these practices saturate the retailers’ stocks. It is not really natural – nor is it a sign of a balanced market – to see so many watch boutiques lined up, one after the other, on the Bahnhofstrasse of Zurich. And this persistence of production overcapacity has led to very harmful phenomena such as the explosion of the grey market and the discrepancies revealed by the transparency of the internet. This means that no one trusts anyone else, and clients feel increasingly ‘alienated’ by the market...

In such a landscape, what is the role of an independent brand like Urban Jürgensen?

It is very difficult. I have had a number of discussions with retailers about the state of the industry, and without 113 exception, I can sense their weariness with brands which have no clear strategic direction. Everyone is edging forward hesitantly, but in fact, no one is really changing. Moreover, the same situation exists on the retailers’ side: many of them have nothing to do. They take on the branding, marketing and shop-in-shop concepts of the brands and conglomerates that they represent and that take care of everything for them. As a result, they are not evolving in the face of upheavals in consumer behaviour, or have forgotten the art of selling exclusivity. It’s all about discounts against a website, and many end up being simple showcases, and their destinies depend on being on the right address... Or not. Many retailers are currently more like real estate agents than watch retailers!

Also, let us not forget the current assault of the connected watch on traditional watchmaking. We might not be so far from a time when classical timepieces will end up like typewriters... Very interesting, but with an almost nonexistent market. You buy a watch because you love the tradition or the symbol, but not for its utilitarian function. But I don’t want watchmaking to end up in a museum!

Aren’t you a bit alarmist? You are suggesting that a whole industry could come to an end! And yet it is still taking in billions and creating desire throughout the entire world.

I’m terribly sorry, but the watch has already become redundant in terms of its basic functions. It is a foolish object, if you think about it. If you sit down today and think about how to tell the time, you might consider about twenty effective means, but current-day watches will only come up in the twenty-first place. To make a mechanical watch, you must first create hundreds of micro-components to finally achieve – after highly complex, expensive and lengthy processes – a very fragile structure that tells the time more or less correctly. Inside an industry like that – the saying: Fish can’t see water – is very applicable here. But I have seen markets much bigger than this one fall away in the face of such a paradigm shift when the tipping point is reached. Kodak and film replaced by digital, and bespoke tailoring in London killed by video conferencing to name a few.

Urban Jürgensen: the sharp eye of Mr Petersen
REFERENCE 1140L PLATINUM DIAL

At the same time, you would not have invested in the traditional watch industry if you did not believe in its future...

Of course not. To me, the essential point is that the industry – and this is particularly the case for the big brands – is taking hold of itself as it realises the degree of effort and the treasures of the imagination that will be necessary to produce in order to adapt or even to reinvent itself. The world’s digitalisation is changing everything. No one believes in the brands’ words any more. When vintage watches and production series from 50 years ago are so successful today on the internet, it is precisely because people trust the sincerity of those old productions, which they often consider more authentic than the pieces coming off the assembly lines of the same brand these days. Most bigger brands need big changes in the corporate governance to manage this. It will not happen from within the old rank and file.

I am familiar with sudden paradigm shifts, because I worked at Nokia. Losing your position as a leader can happen within just 24 months! Millennials want substance, and because the internet provides transparency, they will research you attentively before buying your product, and they will ask their friends what they think. There is no such thing as blind trust anymore!

Part of the outdated management in the industry you see by the increasingly thinly veiled attempts to ‘innovate’ on a basic mechanical construction where a great solution was found two hundred years ago. Remember – the more modern materials and ‘innovation’ is deployed – the faster the value declines. Most of the brands’ true value lies in their heritage – and that’s where they need to focus. Investing in marketing aimed at retaining and building that brand equity, and concentrate more on clients’ needs, providing them with high quality for the right price. I do not believe the category will sustain ever more elaborate ‘event’ marketing campaigns – it is more than enough when you build correctly on the fine legacy many have. Urban Jürgensen certainly has attracted a lot of attention by being true to the legacy, deploying old crafts and avoiding all manners of external co-branding to prop up our offerings. Think of a company like Hermès! They do not ‘innovate’ – they execute on legacy, craft and quality like few – and the results are clear.

I believe in a future for real authentic mechanical watch brands that stay carefully in tune with their legacy, and pay insane attention to their messages to the market and clients. At Urban Jürgensen we still make products that easily last three generations – and are solely built using historic legacy methods where the amount of handcraft involved means every watch is unique. This type of artistic product of high value will remain a family treasure and keep value for centuries to come – but the market will shrink and it will continue to be a challenging industry!